Tag Archives: Bank Runs

Rich Man’s Bank Hit by Bank Run, Collapse, “Bail-In”, by Don Quijones

The powers that be are running out of fingers to plug up the leaking dike that is the European banking system. Seems holes have opened up in tiny tax-haven Andorra and Spain. One never knows which snowflake will set off the avalanche, but its coming if there’s any logic and consequences in this crazy world. From Don Quijones, at wolfstreet.com:

In Europe nary a day seems to go by without some mention or rumor of a bank run or bank closure. Ground Zero of the current troubles is Greece, whose broken financial system is now wholly dependent on regular infusions of euros from the ECB. The moment those infusions stop – something the ECB has warned could happen at any time – the country’s banking system collapses. On Wednesday Greek banks saw deposit outflows of €300 million, the highest in a single day since a February deal with the euro zone that staved off a banking collapse.

But it’s not just on Europe’s periphery that banks are experiencing problems. At the beginning of this month, Austria sent shockwaves throughout the old continent’s financial markets when the Austrian government refused to grant the scandal-tarnished, “bottomless pit” bank Hypo Alde another taxpayer-funded bailout. Instead, bondholders, even those with bonds guaranteed by the Austrian state of Carinthia, were made to eat the losses in one of the first cases of bank bail-ins since sweeping changes to EU-wide legislation last year [It was a “long-yearned-for shock of liberation” for taxpayers; read… Austria ‘Pulls Ripcord’ on Bailouts, Lets ‘Bottomless Pit’ Hypo Alpe Bank Drag State of Carinthia into Bankruptcy].

A Rich Man’s Mini-Bank Run

In recent days the mayhem has spread to Spain’s capital, Madrid, and Andorra, a tiny mountain-ringed tax-haven perched between France and Spain. The initial trigger of the panic was an accusation from the US government of money laundering and a host of other unsavory practices taking place at Andorra’s third largest bank, Banca Privada d’Andorra (BPA). Fears quickly escalated that the bank would be unable to pay the sort of fine that the US treasury might impose, setting off a mini-bank run that culminated in the imposition of capital controls at Andorran branches of BPA as well as the seizure of deposits of 15,000 account holders of the bank’s Banco de Madrid subsidiary.


To continue reading: Rich Man’s Bank Hit by Bank Run